Wireless and networking specialist distributor, Lan 1, is celebrating its fifteenth birthday this year. NADIA CAMERON caught up with managing director, Daniel Lee, to discuss the importance of the NBN, potential acquisitions and his plans for the future.
What’s your outlook for 2010? Are we over the worst of the downturn?
Daniel Lee (DL): We are in a fortunate position and expecting 30 per cent growth this [financial] year. The growth has come from our infrastructure business, and resellers that focus on infrastructure opportunities like the Government stimulus package. One of the largest opportunities we closed recently – which was over $1 million and is one of many coming through – was the result of stimulus money. But we are only focused on security, storage, networking and CCTV/surveillance. If you aggregate over PCs, notebooks and the rest, the market is flat. We intend to grow another 30 per cent in 2010/2011, and we have made a commitment to have another warehouse and five people in Perth, Western Australia. The reason we are doing that is if you look at the resources market, there is $50 billion being invested in projects. Not only that, because we are a well-funded company, we haven’t experienced any financial issues through the crisis. I think the financial crisis we’re having is with the credit crunch at the reseller level. We’re seeing a double standard: Big companies are securing credit much more easily and at a lower rate; while SMBs are facing the credit crunch. I’m hoping the Senate Inquiry being undertaken at the moment on the banks to take a more realistic role in the collateral they provide to SMB will fix this issue.
What do you attribute the growth to?
DL: We had a difficult year in 2008/2009 and took a 30 per cent dive in revenue, because we had to evolve the company. We knew that for good or bad, we had to disengage with some of our vendors that weren’t innovating, and those offering more time-and-place products. So in 2009/2010, we’re seeing an explosion in growth. We are now more in the SME [50-500 seats] and enterprise [500+ seats] markets. SMB [up to 50 seats] would now be about 30 per cent of our business, while SME is about 35 per cent, and enterprise is 35 per cent. Four or five years ago, SMB would have dominated at about 50 per cent. A lot of people you talk to will say that if you’re nimble and evolve over time, you’ll always have a place as a value-added distributor.
Do you think the role of a distributor today is the same as it always was?
DL: Time-and-place distribution hasn’t changed – there are still people who just want to buy 100 servers, or 100 hard drives. I think what has evolved is the more complex solution sales. With the GFC, vendors were cutting back their resources and staff, and putting more importance on value-added distributors. For example, with one of our vendors, we’re now keeping all spares in our warehouse and providing level two, 24/7 support. We have 10 engineers providing that more in-depth support on shift rotation.. What’s changed today is that value-added distributors have to move even faster to meet those requirements.
The other thing is we’re more an extension of the vendor now, and we have to work much more closely together, with the same philosophy and same culture. It’s the same at the reseller end – we are more of an extension of them now. A classic example was a recent deal where we did all the proof-of-concept and design. The integrator still had an important role managing the relationship, rolling out the project, and providing level-one support. But we were an extension of them.